The country's public debt stock is now eight billion dollars, Finance Minister Dr Kwabena Duffuor announced on Thursday.
Presenting the 2009 budget to Parliament, Mr Duffuor said public debt rose by about US$600 million last year to an end year position of US$8.0 billion, which is about 8.1 per cent increase over the 2007 position of US$7.4 billion.
The increase in public debt during last year was mainly driven by about US$400.0 million and US$200.0 million increase in external and domestic debts, respectively, he said.
By the end of 2008, public debt consisted of 49 per cent and 51 per cent of external and domestic debts, respectively.
Dr Duffuor said the ratio of Gross public debt to GDP declined from 142.6 per cent in 2001 to 41.4 per cent in 2006 due mainly to the impact of the Highly Indebted Poor Country (HIPC) initiative and the Multilateral Debt Relief Initiative (MDRI).
"Unfortunately, the ratio has since 2007 risen to 52.1 per cent (as recorded in December 2008) as result of renewed borrowing on non-concessional terms and mostly for economically unproductive projects," the Minister said.
Ghana's total external debt (including IMF debt) stood at US$3,982.6 million by end of December, 2008, representing 24.7 per cent of GDP.
By creditor categorizations, multilateral debt continued to dominate, constituting about 49.2 per cent of total external debt despite the substantial debt relief under the Multilateral Debt Relief Initiative (MDRI).
Bilateral and commercial debts constitute 27.5 per cent and 23.3 per cent, respectively.
On creditor basis, the World Bank continues to hold the largest share, contributing about one third of the total external debt.
Dr Duffuor said 36 grants amounting to US$455.9 million were committed as development assistance last year. In terms of use of funds, General Budget Support under the Multi Donor Budgetary Support (MDBS) constituted 23 per cent with the remaining as project grants.
A total of GH¢236.99 million (US$241.9 million) was received as debt relief, comprising GH¢170.2 million and GH¢66.87 million for HIPC and MDRI respectively.
About 49.7 per cent and 50.3 per cent of the HIPC relief came from multilateral and bilateral sources respectively. Of the MDRI,
about 66.3 per cent came from the World Bank (IDA) and 33.7 per cent from the African Development Bank (AfDB).
On domestic debt, the Minister said, the Government's debt strategy was geared primarily at the reduction of debt servicing costs; and extending the maturity profile of the debt stock.
A key component of the strategy was to shift from the heavy reliance on short term domestic financing to longer term maturity bonds open to non-resident investors.
"This was to help diversify the investor base in government securities and to avoid bunching up of maturing debt in the short term," he said.
However, Dr Duffuor said due to the commodity crisis in 2008, which triggered high inflation; the shift to longer term securities was unsuccessful as there was strong preference for short term instruments by domestic investors.
The financial crunch also discouraged the re-opening, and new issuance, of medium term securities to non- resident investors.
The total sale of Government of Ghana securities from January to December 2008 amounted to GH¢3,848.27 million, while maturities were GH¢3,012.10 million, resulting in a net borrowing of GH¢836.17 million.
For the same period in 2007, a total sale of GH¢3,969.31 million with maturities of GH¢3,107.53 million was done, resulting in a net sale of GH¢861.72 million.